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BBC Worldwide re-shapes along regional lines, fares well in FY14

MUMBAI: BBC Worldwide has revealed a year of underlying growth, posting a profit of £157.4 million in FY14, up 0.7% from the year-ago period and 11.6% at constant currency.

Headline profit margin increased from 14% to 15.1%, a record for the company. This was achieved on headline sales of £1.04 billion, down 6.6%, or 5.2% at constant currency.

This reflected a portfolio changes: the sale of Lonely Planet and a new revenue share agreement for BBC.com. Adjusting for these, trading revenue was broadly flat, with growth from non-English language markets, sales to digital platforms and advertising helping to offset pressure on US and UK affiliate fees and declining DVD markets.

These results were delivered despite the strengthening of sterling in the year. Movements in foreign exchange rates had a £17.1 million negative impact on the headline profit.

BBC Worldwide CEO Tim Davie said: “BBC Worldwide performed well, reflecting the quality of our content and enabling reinvestment into the UK television industry. Headline profit at constant currency, shareholder returns and returns to the indie sector all grew by double digits. This was achieved at the same time as a major re-shaping of the company along regional lines.

“We will continue to execute on our strategy – more premium content, dynamic global brands and digital innovation – in the course of the new financial year. While our results for 2014/15 will reflect the choices and investments we are making to do this – including BBC Store and the introduction of new brands – we nonetheless expect to deliver further returns to our shareholder over the course of the year.”

BBC Worldwide has announced an increase of 11.4% in returns to the company’s parent, the BBC, to £173.8m (2012/13: £156.0m), equivalent to 10.1% of the year’s content funding for BBC Television. This includes a significant increase in its investment in BBC commissioned content, up 19.5% on the prior year to £88.9 million (2012/13: £74.4m), further supporting the BBC’s desire to air ambitious, high quality content to UK audiences.

Stand-out titles supported by BBC Worldwide included ‘Top of the Lake’, a third season of ‘Sherlock’, the 50th anniversary of ‘Doctor Who: The Day of the Doctor’ and natural history series ‘Hidden Kingdoms’. Dividends of £58.5 million were up by 2.1% from the previous year (2012/13: £57.3m).

Inspiring global audiences

In October 2013, BBC Worldwide launched a new strategy focused on inspiring audiences through offering more high quality content, increasing the brand portfolio and developing more digital avenues for audiences to access content, with bbc.co.uk and BBC.com at its heart.

Progress has been made across all three aspects of the strategy:

Content:

•Investment in content increased by £24.2 million to £200.6 million (2012/13: £176.4m), exceeding the £200 million target set for 2014/15 one year early.

•In 2013/14 BBC Worldwide represented over 250 British independent production companies, with over 40 output and development deals in place, with those struck in the year including start-ups Lonesome Pine and Voltage TV.

•New content partnerships included an agreement with CCTV, China’s state broadcaster, for joint development partnership of natural history titles.

Brands

•BBC Worldwide delivered over 40 channel feeds across 123 territories in the year.

•BBC America’s ratings grew a further 13.5%, delivering eight consecutive years of growth.

•2013/14 saw leading franchise brand ‘Doctor Who’ celebrate its 50th Anniversary in November. BBC Worldwide delivered a simulcast in 98 countries and 15 languages, receiving a Guinness World Record for the largest ever simultaneous transmission of a TV drama.

Digital

•BBC.com reached an average of 78.9 million unique users by year-end, including 4.7 million to the non-news sections: Travel, Future, Autos and two new sections launched in the year, Culture and Capital.

•E-commerce also continued to do well with BBCShop.com in the UK delivering 30.4% growth.

•Approval was granted for the UK version of BBC Store, which will offer UK audiences access to around 10,000 hours of content to buy and keep at launch in 2015.

A new organisation

2013/14 also marked the company’s first full-year operating as a regionalised business, enabling a clearer focus on clients, partners and audiences. This is the first time that BBC Worldwide has reported results on a regional basis, with seven regions segmented into the four areas below: UK, North America, Australia and New Zealand and rest of the world, collectively known as Global Markets.

While all the regions delivered a solid operating performance, the organisation saw a particularly good performance from Global Markets, with both Western Europe and emerging markets growing very strongly. The other business areas all delivered stable results despite trading conditions that were tough for some of its established businesses:

The UK biz

The UK business is successfully reducing dependency on DVD to become an increasingly diversified and digital business; headline sales of £362.2 million (2012/13: £380.3m) and profit of £55.2 million (2012/13: 57.9 million), down 4.8 per cent and 4.7 per cent respectively, also reflect a one-off charge relating to the bankruptcy of audiobook publisher AudioGO, in which BBC held a minority stake.

•UKTV, of which the company owns 50 per cent with Scripps Networks Interactive, grew its share of the commercial TV market to an all-time high of 8.2%.

•BBC Good Food and Top Gear magazines both continued to outperform their competition in circulation.

North America

BBC Worldwide North America held its own while facing tough and fragmented market conditions. Headline sales of £342.5 million (2012/13: £361.2 million) and headline profit of £50.7 million (£53.5 million), both down 5.2 per cent, were affected by the impact of a new revenue share agreement for BBC.com, most pronounced in its largest advertising market, and a £4.8 million production tax credit which reduced revenue by the same amount.

Ratings for North America’s flagship cable channel BBC America climbed by 13.5%, delivering eight consecutive years of growth as BBC AMERICA showcased more original TV dramas than any other cable channel, and had the highest number of critically acclaimed programmes on US ad-supported television in 2013, among them the drama ‘Orphan Black’.

It was another strong year for digital sales, with VOD and DTO together up 36.7% in local currency.

Global markets

Global markets delivered a 10.8% increase in headline sales of £279.1 million (2012/13: £251.8m), with profit up by 45.2% to £39.5 million (2012/13: £27.2m).

•The fourth series of ‘Danse avec les Stars’ (Dancing with the Stars) delivered an average audience of 6.3 million in France.

•Top Gear delivered BBC Knowledge’s highest ever ratings on Poland’s Cyfrowy Polsat platform in March.

•’Sherlock’ was Asia’s stand-out hit with it attracting over 67 million hits on China’s digital platform YouKu in the year, and to date close to 70 million.

•And in Latin America, BBC Entertainment was named the Best Pay TV channel in Mexico’s Premios Anuales for the second consecutive year.

Australia and New Zealand

Australia and New Zealand together form a key region for BBC Worldwide. The year’s performance shows that BBC is moving in the right direction, with strategy building blocks for the future in place. Headline sales of £76 million (2012/13: £132.7 million) and headline profit of £12.4 million (£17.8 million) were down 42.7% and 30.3%. Excluding the impact of the Lonely Planet disposal and foreign exchange, headline sales were up by 4%.

BBC Worldwide ANZ secured a number of important deals including an agreement with pay TV platform Foxtel which will become launch partner for BBC First, a second look with the Australian Broadcasting Corporation and a production partnership with FremantleMedia Australia.

•BBC Knowledge in Australia witnessed ratings increase by 14.4% on the prior year.

•The DVD market also included some notable successes including a 95.5% growth in sales for ‘Call The Midwife’ and 59.6% growth in ‘Doctor Who’ title sales.

Davie said, “All our regions put in a competitive performance with Global Markets particularly impressive in the year. Despite facing tougher trading conditions in some of our established businesses, I am pleased that we held or grew margin in all four regional segments. Longer term I am confident that a greater local focus will bring benefits from closer connections to consumers and clients alike, and from taking more decisions in market.”